The Dealmaker – March 2018

We have a specially extended column this month as exhibition sector news has been dominated by the announcement that Informa and UBM are in talks which would see Informa acquire UBM for a mixture of shares and cash. The initial announcement was made on 16 January and was forced prematurely on the two exhibition giants by a sudden and unexplained upwards movement in UBM’s share price.

The deal terms put a premium of 30 per cent on UBM’s share price so it was unsurprising that UBM’s shares initially surged by 20 per cent from 750p at the start of the week to 900p. At the time of going to press UBM’s share price has since drifted down a bit to 868p.

The Informa share price dropped from 750p to 705p on the announcement and has since dropped steadily to drifted to 660p, an overall drop of 12 per cent suggesting that the shareholders are not too enamoured with either the initial announcement or the detail that has followed.

Analysts have calculated that the deal value represented a 14x multiple of UBM’s 2018 prospective EBITDA before the Informa price drop but is now at less than 13x. The offer was formalised on 30 January with both companies recommending it to their shareholders. Ongoing cost savings of £60m pa have been identified and the extent to which this is a takeover rather than a merger was made clear with Tim Cobbold and Marina Wyatt (UBM’s CEO and CFO respectively) due to stand down as soon as the deal is completed.

Full shareholder approval is required which will involve investor roadshows but one would imagine that key shareholders have already been sounded out. The fit of the two companies broadly works– Informa are underweight in Asia and UBM in the Middle East, although integration will be trickier in the USA – and the resulting company will be significantly larger than Reed.

An international merger

In July last year Clarion announced that it had been acquired by Blackstone private equity. A month later, Blackstone announced the acquisition of Hong Kong-based Global Sources following a de-listing from Nasdaq.

The dual set of transactions, which were planned and completed independently of each other, was Blackstone’s first major move into the exhibition sector and means that they are represented across the world with two strong axis points in UK and Hong Kong. Now the businesses have been merged and will be run by the Clarion management – a massive task given that the two businesses are so different in terms of both portfolio and culture.

Global Sources specialises in an online platform and eight sourcing exhibitions for Chinese and HK companies covering sectors such as Electronics, Gifts and Home and Fashion. It does however give Clarion massive infrastructure in Asia, an area where they have not yet made their presence felt.

Diversified Communications continue to narrow their geographic focus with the sale of HRM Asia – a series of human resource summits, congresses and awards in Singapore – to US-based LRP Publications. Diversified started their divestment in early 2015, selling their India exhibition business to ITE and followed this a year later with the sale of their Australian consumer shows to former international director Matt Pearce.

Will their Hong Kong business be next?

The UK business is clearly one of the geographic priorities as they have added to their portfolio with the acquisition of London-based Tent Exhibitions Ltd, which organises three co-located events: London Design Fair, Tent London and Super Brands London.

The entrepreneurs

We seem to be going through another cycle of M&A activity for entrepreneur-founded businesses in the UK and another company that has recently emerged as an acquirer is the Mark Allen Group. Towards the end of 2017 they acquired Unity Media, organiser of the RCI show, an event for roofing and architectural professionals taking place at the Ricoh Arena in Coventry.

Now they have bought Miles Publishing, a media company founded by Miles Bossom which focuses on the telecoms sector with their NEC show, Channel Live! Angus Montgomery has acquired a majority stake in FIT Events Ltd, organiser of the Fabricator Installer Trade (FIT) Show for the UK window, door, glass and glazing sectors, to continue their steady stream of purchases.

Artificial Intelligence (AI) is a hot topic and by its very nature will be for some time to come, so it’s inevitable that the events created in this space will be snapped up by the larger organisers.

AI Business, organiser of AI Summit which takes place in London, USA, Asia and South Africa, has been acquired by Knect365, Informa’s Knowledge & Networking division. dmg events has expanded further in South Africa with the acquisition of a portfolio of five construction and port-related transport exhibitions from Hypenica.

The Hypenica management team originally founded Spintelligent which they sold to Clarion in 2009. dmg’s first entry into South Africa came two years ago when they acquired Exhibition Management Services which runs Africa’s Big 7, the largest food and beverage exhibition in Africa.

Scouting for acquisitions

Messe Frankfurt also continued its run of acquisitions buying up a majority stake in Middle East Cleaning Technology Week, held in Dubai, from VIS Exhibitions to complement Texcare, their market leading textile care show. Messe Frankfurt already had an existing relationship with VIS Group working together on the Texcare Forum India conference.

When sanctions were lifted against Iran in early 2016, a lot of exhibition companies started acquisition scouting in what is the world’s largest untapped domestic exhibition market. Most deals are yet to come to fruition but one organiser that has made inroads is Messe Stuttgart with the formation of a partnership with ibec, the Iranian trade fair for the bakery sector.

Stuttgart made a similar entry into Turkey in 2010, also via the bakery sector, when they acquired Ibatech.

Finally this month, Easyfairs has acquired the events division of Textitirama, a non-profit textile association in Belgium. The business comprises of four exhibitions and a conference in the interior textile sector.

The Dealmaker – March 2018 was last modified: May 1st, 2018 by Nicola Macdonald